“If you look at economic and price fundamentals, the BoJ has to ease further soon.”

The Internal Affairs Ministry announced early Friday morning that core consumer prices, which exclude volatile fresh food prices, dropped 0.3 percent in April, on the heels of a similar drop the previous month.

Friday’s weak data—slightly better than a Bloomberg forecast of a 0.4 percent fall—followed Japanese media reports that Prime Minister Shinzo Abe is inclined to delay a long-planned consumption tax hike over concerns it could damage the already fragile economy.

Tokyo is scheduled to raise the sales tax to 10 percent from eight percent in April 2017.
Risk of ‘crisis’

Abe has frequently said that the hike should go ahead unless there is an event on the scale of the collapse of Lehman Brothers or a major earthquake.

But in a plenary session of the G7 leaders’ summit Thursday, Abe argued that the global economy faced a risk of falling into a “crisis,” drawing comparisons with the mood in 2008 just months ahead of Lehman’s collapse, when Japan hosted the G7.

“Abe’s reference to the Lehman crisis is important in the context of whether he will postpone the scheduled consumption tax hike,” Masaaki Kanno, managing director of economic research at JPMorgan, said in a commentary.